New York, November 30, 2012 -- Moody's Investors Service has affirmed the A2 unlimited tax General Obligation (GOULT) bond rating and the A3 Certificates of Participation (COPs) rating for Buckeye Local School District (Medina County, Ohio). Concurrently, Moody's has removed the negative outlooks for these ratings. The GOULT bonds are secured by the district's general obligation unlimited property tax pledge. The COPs are secured by the district's annual appropriation pledge, though lease payments have been made with proceeds from the district's share of a 0.5% sales tax levied in Medina County.
Affirmation of the A2 GOULT rating continues to reflect the district's significantly limited financial position; above-average resident wealth and moderately-sized tax base; and manageable debt burden with no additional debt anticipated. The COPs continue to be rated one notch below the general obligation rating reflecting the appropriation risk, the essentiality of the financed asset, the satisfactory legal provisions governing lease payments and the weakened credit characteristics inherent in the A2 general obligation rating.
Removal of the negative outlook primarily reflects the August 2012 passage of a five-year 7.9-mill emergency levy. These new revenues, combined with additional expenditure reductions implemented in fiscal 2013, should provide near-term support to the district's ongoing operations and enable the district to stabilize its financial position. Further, the district is expected to now be released from Fiscal Caution as it is able to demonstrate three consecutive fiscal years of positive cash carryover balances.
- Above-average full value per capita and resident wealth levels
- Manageable debt burden with no new debt anticipated
- Weak financial position, limited ability to withstand additional pressure
- Historic inability to pass voter-approved levies on a timely basis
WHAT COULD CHANGE THE RATING UP
- Ability to achieve and sustain structurally balanced operations
- Improved General Fund financial profile, reflected in increased cash and reserves
- Demonstrated successful management of the levy cycle
WHAT COULD CHANGE THE RATING DOWN
- Deterioration of financial position
- Inability to achieve and sustain balanced operations
- Failure to achieve consistent levy success
- Material weakening of demographic and tax base indicators
The principal methodologies used in this rating were General Obligation Bonds Issued by U.S. Local Governments published in October 2009 and The Fundamentals of Credit Analysis for Lease-Backed Municipal Obligations published in December 2011. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
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Moses Kopmar Associate Analyst Public Finance Group Moody'sInvestors Service, Inc.One Front Street Suite 1900 San Francisco, CA 94111 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Orlie Prince Senior Vice President Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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